IEN focuses on addressing inequality and the climate crisis by mobilizing capital through endowments, retirement funds, and student-managed investment funds (SMIFs). This spring, we released a new report on the state of the field of SMIFs, highlighting the assets under management, fund structure, and sustainable investing strategies used by SMIFs.
SMIFs provide an experiential education opportunity for students interested in finance by allowing students to actively participate in financial markets by managing a real investment portfolio. These SMIFs support students in gaining real-world experience and developing their professional networks, frequently resulting in high job placement rates.
State of the Field
Currently, nearly 600 US SMIFs manage over $750 million in assets. SMIFs’ assets under management (AUM) range from $2,000 to $62,000,000, with the vast majority of funds managing around $1,600,000. Investment vehicles vary based on the school’s capacity to actively manage their portfolio. Several schools prefer to integrate active management and risk assessment into course objectives, spending substantial time selecting individual investments for their portfolio. Conversely, other schools choose to operate a more passively managed fund, investing in mutual funds and exchange traded funds(ETFs).
To provide students a real-world experience in sustainable investing, SMIFs has also begun to integrate a sustainability lens into their investment philosophy. In a 2018 NACUBO survey, of the 200 institutions that reported having SMIFs, 44% operated with responsible investing guidelines.
State of the Field of Sustainable Investing Focused SMIFs
There are currently 40 SMIFs in North America that operate with a sustainable investing strategy and are involved in IEN's SIILK Network. These funds have a cumulative $68.4M in AUM, which represents about 10% of the total SMIF AUM in the United States.
Of these surveyed sustainably invested SMIFs (SI SMIFs), one-quarter of funds focused on ESG integration, close to a quarter (23%) invested with an impact lens, 18% utilized negative and positive screens, and 5% engaged as shareholders. Funding sources varied across funds, with the majority of funds being carved out of the university endowment or funded by a separate pool of donations. And over half (55%) of surveyed funds invested in public equity, followed by a large number of respondents that indicated they invested in private equity (42.5%).
Participants in IEN's SIILK Network frequently share that an integral step in moving forward with launching their own SI SMIF was connecting with other SI SMIFs on best practices, and hearing about how their SI SMIFs were founded and are currently managed. This report includes case studies on four funds:
- Yale University Dwight Hall Socially Responsible Investment Fund (DHSRI): Undergraduate-run socially responsible investment fund. Yale’s Dwight Hall Center for Public Service and Social Justice initially seeded the fund with $50,000 of its $10 million endowment in 2008. DHSRI has over $200,000 AUM and pursues positive social and environmental impact while maximizing financial return. In 2016, DHSRI became the first student group to pursue shareholder engagement as a sustainable investing strategy.
- Northeastern University Impact Fund (NUImpact Fund): Undergraduate-run investment club with over 40 members focusing on Impact and Community Investing. The fund manages over $50,000 in AUM via Private Equity.
- Bryant University Archway Investment Equity Fund: Undergraduate-run fund established in 2005 to provide Bryant University students with the opportunity to manage an investment portfolio of actual money following the principles used by financial professionals. The initial investment in the Fund was $200,000. Over the years, Bryant University has provided four additional cash infusions totaling $250,000. The fund’s portfolio was valued at about $1,700,000 in December 2020.
- Portland State University Impact Investing Fund: The graduate-run PSU Impact Investing Fund focuses on investing in private, early-stage companies in the Pacific Northwest and especially those in Portland. The fund has a particular interest in pursuing investments in early-stage start-ups with high potential to make significant positive environmental or social impact alongside financial returns.
The SIILK (Sustainable and Impact Investing Learning and Knowledge) Network is an initiative of IEN. SIILK has three main goals: (1) scale the uptake of sustainable investing education, including courses and experiential education opportunities like SMIFs, (2) support SMIFs as they work to build stronger bridges between their SMIF and their institution’s broader endowment, and (3) increase the diversity and number of students that enter the sustainable investing field.
Through SIILK, IEN is working to ensure higher education institutions develop the next generation of leaders committed to an equitable, low carbon, and regenerative economy through student-managed investment funds and sustainable investing curriculum.
If your institution has (or is planning to start) a SMIF, please complete this survey to get involved with SIILK and be included in future iterations of this report.
Contact Nicole Torrico at [email protected] for more information, to get involved, or to learn more about opportunities to expand access to sustainable finance education through partnership or sponsorship.